Mortgage Rate Update July 10, 2014

Mortgage note rates are unchanged this morning but the accompanying closing costs are modestly lower so in fact the overall rate environment is slightly better today.

A new development out of Portugal is causing a global “flight-to-safety” which is helping the outlook for interest rates here in the US.  Earlier today news broke that a major Portuguese lender missed payments on short-term debt it holds.  The troubling sign has sent European and US shares lower.  Bad news for the stock market tends to be good news for mortgage rates.

Minutes from the most recent Fed meeting were released yesterday and indicated that the Fed plans to be finished with quantitative easing (QE) as of October.  Some analysts had thought the Fed would keep a portion of the plan in place through December.  Although the nominal impact of the Fed pulling the plug on QE is fairly de minimis their move signals a possible accelerated approach to raising short-term interest rates 2015.  In the long-run this is unfriendly news for mortgage rates but in the near term rates benefit because stocks suffer from the news as well.

From a technical perspective the US 10-year treasury looks like it could make a move lower to ~2.40%.  This is about 10 basis points lower than the yield today.  Therefore, I will recommend floating with the hopes that we can get a .125% improvement for interest rates.

Current Outlook: floating